Swedish truckmaker Volvo said Russia’s war in Ukraine has forced it to make provisions in the first quarter totalling 4 billion kronor (€390 million) that will have a negative impact on operating income.
All of the company’s sales, service and production in Russia have been suspended since the war started and sanctions were imposed, according to a statement on Friday. In 2021, about 3 per cent of Volvo’s net sales stemmed from Russia.
Volvo has total assets worth about 9 billion kronor related to Russia, of which 6 billion kronor are classified as cash items, the company said.
Volvo is among the biggest issuers of corporate bonds in Sweden and currently has about 107.6 billion kronor of notes outstanding, according to data compiled by Bloomberg.
It is rated A2 by Moody’s and A- by Standard and Poor’s, putting it comfortably in investment grade. Analysts at Danske Bank said in a note that the impairment was slightly credit negative. However, “it could, together with mounting supply chain pressures from the war, postpone a potential upgrade of the SandP rating to A from ‘A-”. – Bloomberg